A US-China trade war may hurt Taiwanese electronics components makers, China-based businesses (2018/03/25)

  • 2018-03-25
  • 陳 宜濃

As fears of a US-China trade war intensify, worries are also increasing about the likely impact on Taiwanese business. Economists say manufacturers of electronic components, which amount to one third of Taiwan's export volumes, will be most badly affected -- but surprisingly businesses such as textiles that have already moved out of China will not be affected much. 

Fears of a US-China trade war last week caused the Dow Jones industrial average to post its biggest single weekly decline in over two years. If the US and China, two superpowers, do open fire, Taiwan’s industries will get caught up in the crossfire. 

Gordon Sun
Taiwan Institute of Economic Research
This will have the greatest impact on electronic components as the main target is high-tech products. Electronic components are one-third of total export volumes and are directly involved in the manufacture and assembly of electronic products. However, related petrochemical products and equipment will also be affected. Together they could amount to more than half of our exports. 

The analyst says that two kinds of Taiwanese manufacturers will be most affected. One is makers of semi-finished components that are sent to China for final assembly into finished products. The other is Taiwanese business people that have set up manufacturing plants in China to make things to sell to the US, such as makers of car components or LCD TV displays.

Gordon Sun
Taiwan Institute of Economic Research
Taiwanese business people have invested so much in China over the years. Now, if they encounter a US-China trade war, they actually won’t have any means of immediately finding a second factory or a second production location. This is what we need to think about. 

The analyst said that a potential trade war could actually be of benefit to Taiwanese manufacturers that have already moved out of China to set up shop in Southeast Asia, such as textile businesses.